The Office of the Comptroller of the Currency released a preliminary report this week on debanking activities by the nation’s largest financial institutions. Yes, there was some debanking by banks during the height of the “woke” craze under Biden. But as we’ve covered in the HOTLINE, the main villain here is the federal government itself, not the banks.

Yet the OCC – one of the chief offenders itself – takes aim at financial institutions and ignores the role of regulators in pressuring account closures and targeting out-of-favor industries.  It is well-documented that the Obama and Biden administrations used Operation Chokepoint and its sequel to coerce banks into cutting off businesses like gun manufacturers, crypto companies, payday lenders, and energy producers.

President Trump’s recent executive order on fair banking access got it right, addressing years of regulatory overreach and government interference in financial institutions’ decisions:

“Bank regulators have used supervisory scrutiny and other influence over regulated banks to direct or otherwise encourage politicized or unlawful debanking activities.”

A recent House Financial Services Committee report gives a much more realistic picture of how the Biden administration weaponized the 5,000(!) bank examiners to blacklist politically out-of-favor industries and depositors.

Now what will Congress do about it? A simple first step would be to embrace ideas like Senator Tim Scott’s Firm Act, to prohibit regulators from using the much abused “reputational risk” concept.